| This dissertation, to the best of our knowledge, is among the first to address Internet coupons. The aim is to develop an analytical framework to investigate how Internet coupons can be used to target consumers and efficiently price discriminate to improve a firm's profit.; First, Salop's spatial model is modified to represent conventional paper coupons. The model created in this study for conventional paper coupons contributes to the coupons literature in general and has distinct features that separate it from the previous models proposed in the literature. A firm's problem to determine the optimal price, the optimal coupon face value, and the optimal coupon distribution intensity (fraction of consumers who get a coupon) with a conventional paper coupon is solved.; Second, we look at Internet coupons and examine a fixed face value coupon model first. In an alternative model, a different kind of couponing model with a distinct feature, changing face value, is introduced. Without the flexibility of the Internet, firms cannot change the face value of their coupon offerings according to individual consumers' preferences and shopping behavior. However the Internet provides this flexibility to marketers. When we have detailed information regarding consumers' shopping behavior and preferences, we can also estimate their willingness to pay to some extent. With traditional paper coupons a firm is limited to a very small number of different coupons. In practice, a conventional firm generally uses one coupon with the same face value for all consumers. Online marketing allows firms to target their consumers in ways that were not feasible before. Therefore, a firm can effectively target consumers and decide who should be given what coupon.; Finally, the use of coupons, conventional vs. Internet, in a competitive setting is analyzed. A firm's decision to use coupons as a strategic tool in a competitive environment is examined. We look at the cases where two firms compete with each other and use conventional paper or Internet coupons. We calculate the equilibrium profit and market share figures for the firms for alternative couponing strategies and find the general conditions under which one is advantageous to the other. |
